Investec Structured Property Finance has provided a £47.5m development facility to SACO to develop two serviced apartment schemes in Aldgate, E1, and Edinburgh.
The Oaktree Capital Management-backed company is using the loan to develop a 24-storey tower on Leman Street in Aldgate, which will include 168 serviced apartments, and a 72-apartment scheme on George Street in Edinburgh. Both will complete in 2016.
SACO now has a UK portfolio of more than 650 rooms.
The 27-month loan is understood to represent a loan-to-cost of around 75% and Investec aims to achieve an 8% internal rate of return on its lending.
The bank provides senior, stretched senior and shared equity to customers for both acquisitions and development, which is its specialism, particularly in the residential sector.
Investec’s Mark Bladon said: “Over the past 18 months, we have seen significant yield compression in alternative property sectors as experienced management teams, backed by very strong equity sponsors, replicate the developer/operator model that has been so successful in student accommodation.”
